Kind of depends on the ER, aye? It’s already over 124, so 125 isn’t going to be profitable on expiration day unless it exceeds 133 (due to theta decay). So I take it this is a Hail Mary play expecting a killer ER (and it will have to be killer because expectations are so high).
You could make a little money by closing early if it hits 127 or above by early next week. Do you have a margin account? If so, make it a vertical spread to mitigate theta loss and it becomes a much more viable trade. You’ll be in the green early next week with a 125/126 debit spread if it stays flat or moves up. Yes, your profit will be limited to 228 per contract with that spread, but you can widen the spread to increase the profit.
trading_allday on
Thanks but i havn’t bought any calls yet. Thinking to buy one for the earnings…
ScottishTrader on
If the stock goes up by enough it may profit, but if it doesn’t go up enough, or drops, then it will be a large loss . . .
Suggestion? Skip earnings and wait to trade after the ER and the stock settles into its new range.
3 Comments
Kind of depends on the ER, aye? It’s already over 124, so 125 isn’t going to be profitable on expiration day unless it exceeds 133 (due to theta decay). So I take it this is a Hail Mary play expecting a killer ER (and it will have to be killer because expectations are so high).
You could make a little money by closing early if it hits 127 or above by early next week. Do you have a margin account? If so, make it a vertical spread to mitigate theta loss and it becomes a much more viable trade. You’ll be in the green early next week with a 125/126 debit spread if it stays flat or moves up. Yes, your profit will be limited to 228 per contract with that spread, but you can widen the spread to increase the profit.
Thanks but i havn’t bought any calls yet. Thinking to buy one for the earnings…
If the stock goes up by enough it may profit, but if it doesn’t go up enough, or drops, then it will be a large loss . . .
Suggestion? Skip earnings and wait to trade after the ER and the stock settles into its new range.